READCLOUD - sounds like a health retreat for bookworms. But if its inventors have anything to say about it, the word might one day reach the brand heights of Skype, Facebook and iPad.

Co-founders Lars Lindstrom from Melbourne and Jeremy LeBard from Sydney have devised the first social e-reading platform for schools, allowing teachers and students to share notes within the e-book.

''When you're at home studying you can look at questions the teacher has raised and the annotations don't have to be text, they could be a video of a Shakespearean play, or a link to a blog,'' Lindstrom says.

''It's all about critical reasoning - teaching our children to not just believe what they read, but to go out and research it. It's a new way of studying that teachers and schools are excited about.''

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Danish-born Lindstrom, a former investment banker who arranged seed funding for Skype, says that Apple's upcoming iBooks 2 promises a similar virtual reading platform for textbooks, but ReadCloud is more tailored and protected for children.

''You can't let a group of year 7s into a book that has annotations from adults all over the world. Our system is re-fenced for the school so they can lock the system down.''

Lindstrom says 10 local schools have already started using ReadCloud, with a roll-out to an estimated 100 schools set for January next year.

As ReadCloud supports any material, the software has the potential to replace USB sticks at school, allowing students to upload any document, which can then be marked up by the teacher.

ReadCloud's encrypted data is stored in Australia, which alleviates concerns about storage security following Amazon's recent EC2 cloud blackout, which shut down Netflix, Instagram and Pinterest.

The Aussie start-up has also started a dialogue with training providers about delivering their curriculum documents in digital format, doing away with the need for print manuals.

''Instead of putting out big folders and sending them on a truck to run a course, you can load it up on an iPad,'' Lindstrom says. ''There's millions of dollars to be saved just in paper and transport.''

He says that at the request of the Australian Booksellers Association, ReadCloud has also been developed into a ready-made digital book program, with 100 independent booksellers in Australia on board, including Mary Martin Books at Southgate.

For a fee of $2000, the basic eBookstore platform has allowed many small bookshops to sell digital books and still retain their roles as literary arbiters.

''Most books are sold to people who don't know what they want to read,'' Lindstrom says. ''You go to your local bookstore for advice, and that should be the same in the digital world for bookstores trying to keep a community alive around books.''

Lindstrom says it took three years for the six major book publishers in Australia to sign up to have their books available in ReadCloud's digital catalogue, which now offers 75,000 titles including new releases available within 24 hours of the publisher uploading them.

He thinks the Australian book-publishing industry is finally realising that virtual reading is here to stay. ''I think the book publishers have learnt from the music industry. They've seen the writing on the wall. It's coming so fast now. When we spoke to people in 2009, everybody said nobody is going to read books on computers.

''The latest figures out of the US show 30 per cent sales to [adult fiction] e-books, and that's coming to Australia.''